A class action lawsuit was filed against AstraZeneca Plc (AZN) by Levi & Korsinsky on December 23, 2024. The plaintiffs (shareholders) alleged that they bought AstraZeneca American Depositary Shares (ADS) at artificially inflated prices between February 23, 2022 and December 17, 2024 (Class Period) and are now seeking compensation for their financial losses. Investors who bought AZN stock during that period can click here to learn about joining the lawsuit.
Discover the Best Stocks and Maximize Your Portfolio:
- See what stocks are receiving strong buy ratings from top-rated analysts.
- Filter, analyze, and streamline your search for investment opportunities with TipRanks’ Stock Screener.
UK-based AstraZeneca is a global pharmaceutical company that offers treatments for cancer, gastrointestinal, cardiovascular, neuroscience, oncology, and other life-threatening diseases.
The company’s claims about its insurance operations in China and their impact on business activities in the mainland are at the heart of the current complaint.
AstraZeneca’s Misleading Claims
According to the lawsuit, AstraZeneca and two of its senior officers (Individual Defendants) repeatedly made false and misleading public statements throughout the Class Period. Particularly, they are accused of omitting truthful information about the company’s involvement in insurance fraud in China and ancillary matters from SEC filings and related material during the time in question.
For instance, during the Class Period, AstraZeneca consistently reiterated the importance of complying with the rules and regulations of various governmental bodies of countries in which it operates. In all annual reports, the company stated that failure to do so could attract criminal and legal proceedings as well as financial penalties and impact its business operations in the country.
However, subsequent events (discussed below) revealed that AstraZeneca and the defendants wilfully misled investors about the insurance-related fraud in China by its executives. The company had failed to comply with the laws of the mainland, leading to significant business disruption.
Plaintiffs’ Arguments
The plaintiffs maintain that the Defendants deceived investors by lying and withholding critical information about the company’s business practices and prospects during the Class Period. Importantly, the Defendants are accused of misleading investors about their insurance practices in China and failure to comply with required governmental rules in the country.
Notably, AstraZeneca did start sharing information about a possible insurance fraud in China in late 2024. The information became clear before the markets opened on December 18, 2024, when the Financial Times released a report related to the arrest of one of AstraZeneca’s senior executives in China and the associated business disruption. The report stated that the arrest of the senior officials, including President Leon Wang, would weigh on the company’s revenue from China.
Importantly, the sales of oncology products in China were bound to take a major hit from the Chinese authorities’ investigations. Following the news, AZN stock fell by 3.8%.
To conclude, the defendants allegedly misled investors about the potential legal risks associated with having business operations in different countries and a possible impact on the company’s business from a fallout. Despite the issues, AZN stock has gained 23.3% in the past year.
